Cannabis Operator Curaleaf Plunges 46% YTD: Time to Sell or Hold?

Widely regarded as the largest cannabis operator by revenues, shares of Curaleaf Holdings CURLF have been declining persistently over the past few years due to regulatory hurdles and intensifying competition.While this Connecticut-based company has been aggressively cutting costs and expanding abroad, the core domestic market remains challenging to navigate, limiting the impact of its international progress.Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price decline.CURLF’s Domestic Weakness Eclipses International GainsCuraleaf maintains a diversified business model in the cannabis space, spanning both retail and wholesale channels for both recreational and medical use, along with hemp-derived beverages. However, its top line continues to face pressure from a deteriorating domestic market.In its first-quarter results of 2025, Curaleaf’s overall revenues fell by 9% year over year and 6% sequentially to $310 million. Although sales from the company’s international segment increased by 74% year over year, it still represents a relatively small portion of the total revenues. Most sales continue to come from Curaleaf’s domestic business, which remains under pressure due to the ongoing market saturation, pricing challenges and regulatory uncertainty.Despite these headwinds, Curaleaf reported an adjusted gross margin of 50% (up 250 basis points YoY) and even managed to generate $26 million in free cash flow. While higher selling prices and operational efficiencies drove this improvement, it was still not enough to turn a profit. The company’s adjusted EBITDA margin declined 180 basis points YoY to 21%.Looking ahead, we expect the company to scale its international business and boost domestic profitability by focusing on high-margin formats, such as hemp-derived beverages and other products. The company’s multiple cost-saving initiatives could further improve margins.Cutthroat Competition From Other Cannabis PlayersCuraleaf is targeting an overcrowded market. It faces stiff competition from its peers — Aurora Cannabis ACB, Canopy Growth CGC and Tilray Brands TLRY — all of which are also pursuing international expansion and cost optimization strategies, making the competitive landscape even tougher.As CURLF gains ground in Europe and Australia, competitive responses from Aurora Cannabis, Canopy Growth and Tilray Brands could intensify.CURLF Stock Performance and EstimatesShares of Curaleaf Holdings have plunged 46% year to date against the industry’s 7% rise, as seen in the chart below.Image Source: Zacks Investment ResearchLoss estimates for 2026 and 2027 have widened over the past 60 days.Image Source: Zacks Investment ResearchHow to Play CURLF Stock?While Curaleaf’s push into the THC beverages via its Select brand demonstrates strategic foresight, the persistent decline in its core domestic business makes it a risky bet in the near term. Also, a proposed federal bill that could significantly restrict (or even ban) the majority of hemp-derived products was recently approved by a House committee, posing further regulatory uncertainty. With a Zacks Rank #4 (Sell), the stock offers limited upside and elevated risk for conservative investors.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canopy Growth Corporation (CGC): Free Stock Analysis Report Tilray Brands, Inc. (TLRY): Free Stock Analysis Report Aurora Cannabis Inc. (ACB): Free Stock Analysis Report Curaleaf Holdings, Inc. (CURLF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks